Natural Resources Research Articles

Document Type

Article

Publication Date

1-4-2011

Journal Title

The Australian Journal of Agricultural and Resource Economics (AJARE)

ISSN

ISSN 1364-985X eISSN 1467-8489

Keywords

Business profits, Complexity, Farm modelling, Farm management, Bioeconomic farm modelling

Disciplines

Agribusiness | Agricultural Economics | Agricultural Science | Agronomy and Crop Sciences | Environmental Monitoring | Management Sciences and Quantitative Methods | Natural Resource Economics | Natural Resources Management and Policy | Operations and Supply Chain Management | Sustainability

Abstract

Modern farming in Australia is no longer simple. Farms are large, multi-enterprise businesses underpinned by expensive capital investments, changing production technologies, volatile markets and social challenges. The complexity of modern broadacre farming leads to the question: what is the nature of the relationship between farm business complexity and farm profitability? This study uses bioeconomic farm modelling and employs eight measures of complexity to examine the profitability and complexity of a wide range of broadacre farming systems in Australia. Rank order correlations between farm profitability and each measure of complexity show inconsistent relationships, although the most profitable farming systems are found to be reasonably complex on several criteria. Among the set of highly profitable systems are found some characterised by less complexity. A commonly acknowledged feature of farm business complexity is the annual workload of the farmer, yet the trade-off between farm profit and this workload is found not to be large. A case is outlined where the farmer’s annual hours worked could be reduced by 9 per cent for a 3 per cent reduction in farm profit. If farmers’ workloads are proving problematic now, and in the future, then agricultural R&D, service delivery and policy development will need to focus more on being highly attractive to increasingly time-poor farm managers.

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